Dark money riles attorney general's race

Updated 8:45 pm, Friday, May 23, 2014

Photo: Eric Gay, STF

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File- In this Jan. 11, 2011 file photo, Rep. Ken Paxton, R-McKinney, addresses the opening session of the 82nd Texas Legislature, in Austin, Texas. Today, one of the three Republicans vying to become the stateâs next attorney general, Paxton hasnât been shy about billing himself as the second coming of Ted Cruz. Emulating Cruz's rise from onetime longshot to conservative superstar is something many top Texas Republican politicians aspire to. (AP Photo/Eric Gay, File) less

File- In this Jan. 11, 2011 file photo, Rep. Ken Paxton, R-McKinney, addresses the opening session of the 82nd Texas Legislature, in Austin, Texas. Today, one of the three Republicans vying to become the ... more

Photo: Eric Gay, STF

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State representative Dan Branch

State representative Dan Branch

Photo: KIN MAN HUI, STAFF

Dark money riles attorney general's race

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AUSTIN - A prominent Republican campaign finance attorney who recently led the charge to allow wealthy donors to plow more money into federal elections is behind a shadow group orchestrating a new set of attack ads in the Texas attorney general's race.

It is the latest twist in a GOP runoff already chock full of animosity: State Sen. Ken Paxton and opponent state Rep. Dan Branch have been blasting each other for weeks over ethical lapses.

Now, an out-of-state politically active nonprofit has parachuted into the race and started spending anonymous campaign cash on an ad airing in at least seven cities across the state.

The ad, a 30-second spot paid for by a group called the American Dream Initiative, hits Paxton for getting a recent fine leveled by state securities regulators and encourages voters to call his office to tell him to support ethics reform legislation.

Since the anti-Paxton ad started airing earlier this week, the central question surrounding it has been who is behind the group funding the attack.

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The only identifying markers are a mention on the bottom of the TV spot and contracts for the ad buy filed with broadcast TV stations - both of which list Dan Backer, the lead lawyer in the FEC v. McCutcheon case, as the chairman of the American Dream Initiative.

Ethics reform

In a phone interview Thursday, Backer said the group is not attacking Paxton and has not coordinated with either campaign but said Paxton's past behavior requires more scrutiny and is indicative of a need for more ethics legislation.

Paxton recently was fined $1,000 by the State Securities Board for soliciting clients for a financial services firm without a license.

"He is a poster boy for why this government ethics reform legislation is so important," Backer said.

Backer's group is a 501(c)4 nonprofit, a popular vehicle for folks looking to spend money in elections anonymously. Nonprofit 501(c)4s do not publicly disclose their donors, earning them the title of "dark money" groups.

The ad, and its clandestine origin, has roiled the Paxton campaign and its supporters, which have pointed the finger back at the Branch camp for the attacks.

On Thursday, the Branch campaign denied any involvement with Backer's group "or any other third-party effort," said spokesman Enrique Marquez.

The campaign declined to address a question on the minds of team Paxton: How Branch could vote in favor last session to require 501(c)4s to start disclosing donors and then months later seemingly benefit from an attack ad launched by such a group.

"Dan Branch's largest supporter is a (c)4 spending a half-a-million dollars to get him elected," Paxton campaign spokesman Anthony Holm said.

Paxton also has received support from dark money groups. The influential Empower Texans group and the Texas Home School Coalition, both registered as (c)4s, have spent money to help Paxton's run for attorney general, state records show.

Unlimited spending

Earlier this year, Backer received national attention when he represented Shaun McCutcheon in the landmark campaign finance case FEC v. McCutcheon. The U.S. Supreme Court ruled in his favor, wiping out limits on aggregate federal campaign contributions, though it did not touch how much individuals can give to individual campaigns.

Backer's Texas ad appears to run into a gray area of state campaign finance law.

Since 2010, when the U.S. Supreme Court ruled in FEC v. Citizens United to allow corporations to spend unlimited sums in elections, nonprofits registered as (c)4s have been allowed to spend in Texas elections. They cannot give directly to a candidate but can spend on mailers and other advertisements, though they are required by state law to disclose expenditures.

Backer said he does not have to report his spending to the Texas Ethics Commission because the advertisement was an "issue ad" and did not outright advocate for a candidate or to influence an election.

Campaign finance experts said outside groups such as Backer's should not be required to disclose expenditures with state regulators if the content of the ad is issue-driven.

"You don't all of a sudden trigger some reporting requirement by conducting issue advocacy in this state," said Austin-based campaign finance lawyer Chris Gober.

Law-flouting charges

The Paxton campaign lobbed charges that the group could be flouting campaign finance laws by not reporting spending to the Texas Ethics Commission.

If challenged, it ultimately will be a matter for state campaign finance regulators to handle. A complaint can be lodged with the Texas Ethics Commission, or Paxton's camp can decide to launch a lawsuit.

Both candidates have pumped millions of dollars slugging it out on the airwaves in the weeks before the runoff. Branch spent almost $2.5 million on advertising services, while Paxton spent almost $2 million, according to campaign finance disclosures.